The Week Of: March 30, 2020

This week’s news and stories of interest to the AML community. If you prefer a news roundup sent to you, subscribe to our weekly newsletter.

52% rise in number of potential modern slavery victims in UK

The UK’s National Referral Mechanism, the official system through which victims of modern slavery are identified and provided support, reported 10,627 potential victims in 2019, up from 6,986 in 2018, a 52% increase.

The large jump in the official figures is thought to be partly as a result of increased awareness of the issue and the NRM process, according to the Home Office.

Around 80% of the 2019 referrals received a “reasonable grounds” decision, which means they were provided with at least 45 days of specialist support; about 1,000 of the referrals were determined not to be cases of modern slavery.

The most common type of referral in 2019 for both adults and minors was for labor exploitation.

Read more from The Guardian.

FATF: U.S. ‘largely compliant’ with AML/CFT measures, still has minor deficiencies

The Financial Action Task Force has published a report on the anti-money laundering and counter-terrorist financing measures of the United States.

A follow up to the agency’s October 2016 mutual evaluation report, it found that although the U.S. was largely compliant with their measures, it still had “minor deficiencies.” These include a lack of explicit beneficial owner requirements, lack of Bank Secrecy Act coverage for investment advisors, and tax-exemption status for houses of worship.

Minor deficiencies surrounding virtual currencies also exist—certain virtual asset service providers may not be subject to laws; the current strategy used to investigate VASPs is lagging; and money service businesses, a category which VASPs fall under, do not need to keep detailed records for transactions under $3,000, three times higher than FATF’s required due diligence trigger.

Read more at Coin Desk. Read the FATF report here.

EBA issues money laundering warning as criminals adapt to COVID-19

The European Banking Authority on Tuesday released a warning about potential financial crime risks firms may face during the COVID-19 pandemic.

“As most economies are facing a downturn, financial flows are likely to diminish. However, experience from past crises suggests that in many cases, illicit finance will continue to flow,” the regulator said in a statement.

It noted that there is evidence of increased levels of cybercrime, pandemic-related scams targeting vulnerable populations, fake fundraising campaigns, and criminal networks selling rationed goods at higher prices. It urged authorities to:

  • work closely with relevant firms and law enforcement authorities to identify and raise awareness of new ML/TF typologies;
  • ensure that FI’s remain alert to ML/TF techniques that might change due to the economic downturn;
  • remind FI’s to continue monitoring transactions and be more diligent about unusual or suspicious behaviors; and
  • remind FI’s to continue to report suspicions of ML/TF to the relevant authorities.

Read more at Global Trade Review. Read the EBA statement here.